6 food trends to watch in 2024
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Editor’s note: This story is the first in a series on trends impacting the food and beverage industry in 2024.
The food and beverage sector has in recent years experienced supply chain challenges, elevated inflation and rising consumer demand for alternative meat and dairy offerings. As 2024 begins, some of these trends will remain firmly entrenched but their impact will be different.
For example, cash-strapped shoppers have shown a reluctance toward further price increases, leaving many manufacturers unable to use them as a way to pass on costs. In some cases, food prices might drop in the new year.
Plant-based offerings have seen their once-promising future tarnished by a slowdown in demand and questions over the quality of their foods. The upcoming year will see many businesses “course correct” and place greater importance on what consumers want to bring growth back to the space.
Cultivated meat, meanwhile, had an upbeat 2023 with two companies getting regulatory approval from both the USDA and FDA to enter the U.S. market. Still, the nascent sector is relegated to a few specialty restaurants and a higher price tag that could hinder its rollout at retail. The biggest challenges cultivated meat will face in 2024 are scaling up production, winning over skeptical consumers and raising cash.
The new year also will see a rise in artificial intelligence across the sector, a morphing breakfast category and a downturn in the beef industry.
Here’s a look at six trends experts and analysts say will shape the industry in 2024.
Food price relief
After two years of price hikes in an attempt to offset surging costs, food manufacturers have less room to increase them again in 2024 — and in some cases will be forced to implement cuts.
As food makers grappled with inflation, sporadic supply chain issues and higher labor costs, consumers and retailers alike largely accepted the higher prices. But with commodity prices easing, and shoppers cutting back purchases to save money, the ability to further hike prices has largely dissipated.
“There’s still some inflation kicking around, but everyone expects prices, not necessarily to come down dramatically, but certainly to be a bit more competitive in places,” said Neil Saunders, managing director with Global Data. “Inflation tolerance just isn’t there.”
Food prices at home, which have risen 2.9% during the last year, according to data from the Labor Department, have increased between 0.1% and 0.3% in each of the last few months.
Brian Choi, CEO of The Food Institute, a food industry media and market research company, estimates that the average CPG company has raised prices between 5% and 10% per year over the past couple of years but that it “will be more subdued” in 2024
Instead, Choi said businesses must find new ways to manage costs internally and keep margins in check – such as embracing artificial intelligence or other methods of improving efficiencies – instead of primarily turning to price increases.
Pressure from retailers also will likely put further pressure on food makers.
In November, Walmart executives said despite lower pricing in dairy, eggs, chicken and seafood, elevated food costs continue to be a concern for the retail giant and its shoppers.
“The pockets of disinflation we are seeing are helping but we’d like to see more, faster, especially in the dry grocery and consumables categories,” CEO Doug McMillon told analysts.
Walmart’s efforts to lower food prices will inevitably trickle down to other retailers selling food and beverage products.
“We’ll see a lot more focus on pricing and promotions because I think the retailers will demand and the consumers want it,” Saunders said. “That’s going to put enormous pressure on CPG companies to deliver it.”
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